The Seibu Group strives to maximize corporate value and shareholder value by fulfilling its social responsibilities through its business activities and earning the trust of its shareholders, customers, and all other stakeholders based on its Group Vision, which incorporates its management philosophy and management policy, and Seibu Group Code of Corporate Ethics, which sets forth the Group's fundamental rules on compliance. To further promote corporate governance, the Group works to improve management soundness and transparency, to raise the level of and to accelerate decision-making by management, centered on the Board of Directors, and to continuously strengthen the entire Group’s internal control systems. In addition, to ensure the rights and equal treatment of shareholders, the Group engages in constructive dialogue with shareholders to improve corporate value and shareholder value over the medium to long term, and strives for timely and appropriate disclosure of information and appropriate cooperation with its stakeholders.
Management Structure (overview of current corporate governance system)
Seibu Holdings Inc.(The “Company”) has adopted a system of a company with Audit & Supervisory Board Members and has established the General Meeting of Shareholders, Board of Directors and Audit & Supervisory Board stipulated in the Companies Act as company organizations.
The Board of Directors is composed of 11 Directors, four of whom are outside Directors (all outside Directors are independent officers registered with the Tokyo Stock Exchange). The Board of Directors meets at least once a month in principle to make decisions on important matters related to management as well as matters stipulated by laws and regulations, and to supervise execution of business.
The Company believes that outside Directors in particular play a key role in enhancing the fairness of management from an objective and independent standpoint while reflecting their abundant knowledge and insight in management, as well as contributing to the further improvement of the corporate governance and internal control system, and accordingly has made sure that outside Directors make up 1/3 or more of all Directors.
Moreover, in order to ensure objectivity when deciding the candidates and remuneration for Directors, the Company obtains advice in the Remuneration Advisory Committee and the Nomination Advisory Committee, among whose members, respectively, are four outside Directors forming a majority. The Company has also established the Corporate Governance Council consisting of a majority of four outside Directors, which is intended to provide advice on evaluating the effectiveness of the Board of Directors to increase its effectiveness.
The Audit & Supervisory Board is composed of three Audit & Supervisory Board Members, of whom two are outside Audit & Supervisory Board Members (both are independent officers registered with the Tokyo Stock Exchange). The Board meets at least once a month in principle. Each Audit & Supervisory Board Member basically audits the appropriateness and legality of the Directors’ execution of their duties by attending meetings of the Board of Directors and other important meetings and giving his opinion, exchanging opinions with the representative director, receiving verbal updates on the status of execution of business from Directors and others as required, and through other methods. Moreover, to strengthen and establish an internal control system for the entire Seibu Group, each Audit & Supervisory Board Member also conducts surveys of subsidiaries and audits them to determine whether Company-established corporate management is being conducted thoroughly.
The Company has adopted a Managing Officer system with the primary aim of ensuring swift and efficient decision making and business execution to respond flexibly to changes in the management environment. In addition, the Company has established the Management Council, composed of Directors, Managing Officers, Audit & Supervisory Board Members, Presidents of major business companies, as an organization where the Managing Officers and others deliberate on important matters, including proposals to be submitted to the Board of Directors. The Management Council holds meetings twice a month in principle to improve the quality of decision-making.
Furthermore, the Seibu Group Corporate Ethics Committee has been established as an organization to oversee the Seibu Group’s overall compliance system, composed of the President and CEO, Senior Executive Managing Officers, Presidents of major business companies, and outside experts. The committee meets five times a year.
Furthermore, as a deliberative body concerning the preparation, operation and evaluation of internal controls relating to the Group’s financial reporting, we have established a J-SOX Committee, comprising the President and CEO, inside Directors, Presidents of major business companies, etc. which meets once per year.
Apart from this, as a body to determine the policy concerning sustainability actions and monitor the progress, we have established a Seibu Group Sustainability Committee, comprising the President and CEO, Executive Officer in charge of the Corporate Strategy Department and Presidents of major business companies, which in principle meets twice per year.
Internal Audits and Accounting Audits
For internal audits, the Company has established the Internal Audit and Internal Control Department, which is independent from divisions that execute business operations, and in order to maintain soundness in the execution of business, the Company carries out internal audits with a staff put in place of a general manager and six full-time internal auditors. Moreover, for the internal control reporting system pursuant to the Financial Instruments and Exchange Act, the Company carries out evaluation of the effectiveness of the internal controls relating to financial reporting with a dedicated staff put in place of ten employees in the Internal Audit and Internal Control Department. Furthermore, the Company carries out monitoring for the purpose of examining and evaluating the effectiveness and efficiency of the internal control system and maintaining soundness in the execution of business. The Internal Audit and Internal Control Department regularly coordinates with the Audit & Supervisory Board Members and the Accounting Auditor. Financial audits are conducted by Ernst & Young ShinNihon LLC. The certified public accountants who conducted the financial audit of the Company for FY2020 on behalf of the Accounting Auditor were Suzuki Yuji, Suzuki Osamu and NAGASAKI Masahiko. They were assisted in the financial audit of the Company by 19 certified public accountants and 25 others.
Limitation of liability agreements
The Company has concluded limitation of liability agreements with its four outside Directors.
Reasons for adoption of current corporate governance system
In order to conduct proper allocation of management resources, supervision of business management and other functions as a holding company, the Board of Directors of the Company is composed of Directors who are familiar with the Group’s businesses and their management, and independent outside Directors with abundant knowledge and insight. Moreover, the Company ensures the ability to improve the quality of decision-making by soliciting opinions and advice from outside Audit & Supervisory Board Members, attorneys at law, certified public accountants and other experts outside the Company.
In addition, the Company’s management believes that outside Directors and outside Audit & Supervisory Board Members contribute to further strengthening corporate governance and internal control systems by playing a role in improving management monitoring functions, including providing useful opinions and other feedback on management from a standpoint of objectivity, neutrality and independence, based on career histories, experience and knowledge that differ from those of people from inside the Company.
Through the above management structure, the Company believes it can ensure management soundness and transparency by having decision-making that takes account of a variety of opinions and views and by properly auditing and supervising the execution of business.
Corporate Governance Structure
Basic Stance on Internal Control Systems
The Company recognizes that further strengthening the internal control system will contribute to maximization of the corporate value of the entire Group over the medium to long term. At the start of the fiscal year, the Company formulates an annual plan based on each of the items of the Seibu Holdings’ Basic Policy on Internal Controls, having considered the status of initiatives in the previous fiscal year, and reports the plan to the Board of Directors. At the interim period, a progress report is made to the Board of Directors and matters to be noted for the second half of the fiscal year are confirmed to ensure the effectiveness of the plan. Moreover, the execution status is verified at the end of the fiscal year and points for improvement are identified for reflection in the annual plan for the following fiscal year. In this way, a PDCA cycle is established.
Systems to ensure that business is conducted properly (The Seibu Holdings’ Basic Policy on Internal Controls)
Operating status of systems to ensure that business is conducted properly
The operating status for FY2020 is as outlined below. To prevent the spread of infection to our customers and employees, the Company has properly implemented a range of measures under the influence of COVID-19.
a. Compliance system ・To continuously promote compliance-oriented management, the Company utilized workflows, elearning tools and online streaming to implement activities to entrench compliance, evaluate and monitor the effectiveness of internal control over financial reporting at each Group company, and to eliminate antisocial forces. ・To ensure safe, secure working environments for employees, the Company informed all Group companies of the COVID-19 Response Standard and the reporting flow to prevent the spread of infection. b. Document and information management system ・The Company continued working on computerizing the accounting records and approval procedure, and promoting paperless and paper-stockless by implementing a group-wide workflow system. Such efforts helped to facilitate smooth operations even in a remote work environment amid the spread of COVID-19. ・Given an increase in remote work, the Company has reviewed our information security guidelines and revised related regulations, while providing the employees with e-learning and awareness training on information security. c. Risk management system ・The Company worked systematically and integrally to reduce risks that impede the achievement of the management plan targets and confirmed the status of progress on each type of initiative. ・From this fiscal year, the Company started a group-wide risk management program to further enhance the effectiveness of its risk management. We also monitored the measures to the risk from COVID-19 together with the overall program. ・Amid the COVID-19 crisis, the Company has also implemented a range of crisis management measures to prevent our customers and employees from infection with the virus. Corporate divisions used the remote work system to reduce the number of employees working in office, while requiring the employees on domestic business trips to take PCR testing. d. System for efficient decision-making and business execution in line with management policy ・The Company analyzed and evaluated a questionnaire survey conducted to help the Board of Directors fulfill its role and responsibilities appropriately, and based on the questionnaire results, the Company held a meeting of the Corporate Governance Council the majority of whose members are Outside Directors and confirmed the effectiveness of the Board of Directors, and also identified and shared issues. ・To improve the effectiveness of the Board of Directors, the Company secured sufficient time for discussing each proposal through a range of measures, such as distributing meeting materials in advance. In addition, the Company enhanced deliberations at meetings by raising awareness of the management PDCA cycle for even more active discussions. ・At Management Council meetings, the Company reported on the influence of COVID-19, including the effects on its operating performance and measures to protect employees of Group companies from the virus, while discussing the new strategies in light of the changing lifestyle and values. ・To enhance the efficiency of Management Council and Board of Directors meetings, the Company used not only the existing web conferencing system to share the materials, but also the collaboration tools which enable video conference in addition to the satellite venue to secure the environment to facilitate an adequate discussion as usual, while taking thorough preventive measures of COVID-19. e. Group management system ・To maintain and improve the quality of the Group’s audits, the Company provided training to and shared information with each Group company, and inspected and evaluated all audits conducted by Group companies. ・By digitizing documents related to the agenda and reports from Group companies, the Company established an appropriate and effective management system that enables approval even under remote work. ・As released on June 12, 2020, it became clear that certain officers/employees who are mainly operation and management engineers of the Group subsidiaries such as Seibu Construction Co., Ltd. had taken the test and acquired their qualification based on non-factual practical experience. The third-party investigation committee was formed on this matter and the “investigation report” attached to the preventive measures was submit to the Ministry of Land, Infrastructure, Transport and Tourism on March 12, 2021. We take the proposals from the investigation committee seriously to work on strengthening the Group management system. f. System relating to Audit & Supervisory Board Members ・To assist the Audit & Supervisory Board Members in performing their duties, the Company allocated staff dedicated to support operations, and thus, ensured their independence. ・ Even in a work environment under the influence of COVID-19, we maintained thorough communications with and among our employees using web conferencing and other methods, and thus, prevented misunderstanding of each other. We made effective use of systems including the remote access for sharing risk information.
To enhance and strengthen the compliance structure by preparing a code of conduct for employees and officers, the Company has established Seibu Group Code of Corporate Ethics as a basic policy shared by the Group and conducts activities in the three areas of rules, organization and penetration/establishment for the Code's implementation and observance.
A summary of guidance which is to be followed by all our officers and employees in carrying out their duties, based on the Seibu Group Code of Corporate Ethics.
Seibu Group Corporate Ethics Committee
The committee meets five times a year to conduct integrated administration of the compliance structure of the entire Seibu Group, chaired by the President and Chief Executive Officer of the Company and with officers of the Company, external experts and representatives of Group companies as members. The committee decides basic policies for compliance, verifies and reviews the status of their promotion, resolves issues related to corporate ethics and considers measures to prevent their recurrence, among other activities. The committee also holds lively debates including discussions of various compliance-related themes.
Hotlines (Internal Notification System)
For swift identification and resolution of internal issues, the Seibu Group has established two internal notification systems consisting of a corporate ethics hotline and a sexual harassment and human relations hotline. Both have internal contact points and external contact points (a subcontracting company and a law firm). The hotlines are available to all officers and employees of the Seibu Group, and although users give their real names in principle, anonymous calls are accepted. Information from the hotlines is centrally managed by the Company and has led to swift resolution of issues, prevention of recurrence and improvements in business operations, with advice and support accepted from experts as necessary.
Seibu Group Human Rights Policy
As a corporate group that creates activity and excitement for customers in all aspects of their daily lives and conducts highly public business activities rooted in local communities, the Seibu Group respects the human rights of everyone involved in those activities to achieve the ideals behind the “Smiles ahead” slogan of the Group Vision.
In addition, the Seibu Group has established the “Seibu Group Human Rights Policy” to indicate in greater detail the Seibu Group’s views on “Respect for human rights,” which is stipulated in the “Seibu Group Code of Corporate Ethics,” and promotes initiatives for respecting human rights.